Minimum wage puts US citizens, senators on opposite sides

Senate Majority Leader Harry Reid and other Democrats have pledged to bring a bill to increase the minimum wage up for vote again before November elections. File photo of Reid from Oct. 9, 2013. (Source: Senate Democrats/Flickr)

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(RNN) - It goes something like, "When I was a kid in the 1960s, I only made $1.40 an hour and was happy to get it." It's the "walked uphill in the snow, both ways" argument in minimum wage discussions.

Gas was also 33 cents a gallon in the '60s, movie tickets were $1.25 and the average house could be bought for about $14,000. The prices for those items have increased 100 to 150 percent since then.

Accounting for inflation, minimum wage peaked in 1968 when it was increased to $1.60. That equals $10.69 in 2013 dollars, compared to the current rate of $7.25.

Reminiscing aside, the No. 1 reason people oppose an increase is a straightforward one: The belief it costs people jobs. Senate Minority Leader Mitch McConnell, R-KY, brought this to the forefront in an April 30 procedural vote on a minimum wage raise.

"Even though our constituents keep telling us they expect Washington to focus on jobs, that's clearly not what they are getting from the Senate," he said. "Instead, Senate Democrats are pushing legislation today that would cost as many as 1 million jobs in this country."

The bill would have raised the wage to $10.10 incrementally in the next 30 months then adjusted for inflation after that. However, the 54-42 vote to continue debating blocked it from moving on, with the tally falling six short of overriding the filibuster.

'And to the oligarchy for which it stands …'

The "constituents" McConnell referred to disagree with him and other GOP members, according to polling.

Broken down by party affiliation, Pew even found a majority within the demographics. Roughly 90 percent of Democrats were in favor, as well as 71 percent of independents and 53 percent of Republicans polled.

So why didn't the elected officials vote the interests of those who elected them?

The answer may be found in a study published April 9 by Princeton and Northwestern. According to it, the U.S. is neither a democracy nor a representative government. The nation's policies are determined by an elite few who wield an inordinate amount of power compared to the average citizen, which the authors describe as a "civil oligarchy."

The study compared 1,779 policy issues between 1981 and 2002 and compared them to the positions of average Americans, the rich and special interest groups. They explained "economic elites" get preferred treatment when it comes to a policy they want, even when a majority of U.S. citizens disagree with it.

Minimum wage fact, fiction

At first glance, it makes sense that employers would hire less or cut back if they had to pay their staff more.

The Congressional Budget Office has attempted to predict the effects of an increase to $10.10. Its central estimate was it would "reduce total employment" by about 500,000 workers by the time it is fully implemented in 30 months.

That does not mean the CBO projects 500,000 people working now would be laid off, only that it believes the number of employed would not increase as much by then. In comparison, the U.S. has averaged an additional 203,000 jobs per month the last six months.

The "1 million" McConnell referenced came from the same report.

"As with any such estimates, however, the actual losses could be smaller or larger," the report states. "In CBO's assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1 million workers."

However, demand of products would also increase, with the earnings of 16.5 million low-wage workers going up $31 billion. As an economist told Bloomberg, "pretty much every penny" would be put directly back into the economy.

The report also stated the higher wage would bring 900,000 people out of poverty, thereby lowering the need for public assistance.

History

Economists disagree on a connection between minimum wage increases and unemployment. Some, like David Neumark of UC-Irvine, present findings that show a negative effect. Others, like Arindrajit Dube of UMass-Amherst, conclude there is no detectable impact.

Only one Republican, Sen. Bob Corker of Tennessee, voted in favor of the latest hike. Senate Majority Leader Harry Reid, D-NV, switched his vote to "no," but by doing that he can bring up the legislation again.

The change would have meant a 39 percent increase in pay for the lowest-earning workers by 2016. Many of those same GOP senators voted the other way seven years ago on a larger raise.

The Fair Minimum Wage Act of 2007 increased pay from $5.15 to $7.25 - a 40.8 percent increase - in a timeframe of 26 months. It passed the Senate by a 94-3 vote, including votes in favor by Corker and 20 other Republicans still in office, the Daily Kos pointed out.

The House passed the measure 315-116, with 82 Republicans in favor. Four House Republicans who now reside in the Senate, John Boozman, R-AR; Mark Kirk, R-IL; and Jerry Moran, R-KS; voted for it.

Democrats expressed their intent to push the current bill again before midterm elections in November.